Tulsian told CNBC-TV18, "From ADAG pack two stocks come in my mind. One is Reliance Power and second is Reliance Communication because of the kind of noises, which we have been seeing on the telecom front. Now this seems to be a foregone conclusion that Reliance Industries is going ahead of its own."
He further added, "If you really see the financial health of RComm, I do not think that it is really improving. They had a debt of Rs 32,000 crore about a year back that has piled up to about Rs 37,000 crore. They have huge capex lined up. They do not have any serious move on part of the company to monetize or reduce the debt, though they have been talking with the companies."
"About couple of days back we have heard of the enterprise business getting sold to the Bahrain Telecom Company. So it seems that these are just the ideas, which are thrown to the market, but nothing is getting consummated or nothing is really happening on that front, so this is definitely a serious concern."
"Second is the Reliance Power. The Sasan has commenced the production of about 660 MW. So eventually the more and more capacity will go on stream, they will definitely be requiring huge kind of money and the matching equity or the promoter contribution will be required to the extent of 30 percent and that will be requiring huge equity dilution. I do not think that market will really be comfortable at this stage."
"As such you have the negative bias on all the power generation companies. You have to go with the equity dilution at the current stage, because you cannot stop the progress or the implementation of your power projects. Sasan has to happen. In next 18 months probably they will be on with the other five streams also of all the super critical 660 MW units going into the stream every three months or so. So that will really be a big challenge before the company to dilute the equity. Even at the pathetic current valuations they will not be able to mobilize the money."
"So these two stocks really look very vulnerable. In the lot they look to be the lowest priced and people sometimes feel that they have corrected a lot and from hereon nothing much downside can be really seen, but honestly I am really worried on both these stocks. On the relative basis they can fall maybe about 20 percent or so."